WSJ.com: The Denza, an electric vehicle presented by German car maker Daimler and its Chinese partner BYD, in Beijing on Sunday. European Pressphoto Agency
BEIJING— Daimler the German automotive group, Sunday unveiled plans to build an all-electric vehicle with its Chinese partner BYD a further sign foreign operators are under pressure to meet demands by the Chinese government for a massive increase in electric cars to fight air pollution.
The Chinese government has a target of putting 500,000 electric or plug-in hybrid cars on the road by 2015, but the industry would have to sell about 450,000 plug-in cars during the next two years to achieve that target. The shortfall is putting more pressure on auto makers to step up investments in electrified vehicles—such as the Daimler-BYD cars.
Thomas Weber, Daimler's board member in charge of research and development, told reporters that this new model is "undoubtedly one key pillar of our electric vehicle strategy for China."
The Cars Beijingers Covet. The new electric car, called the Denza, is entitled to subsidies from both the central and local governments in China, Daimler officials said. The car was developed by Shenzen BYD Daimler New Technology Co. Ltd, the Daimler-BYD joint venture that was formed in 2010. The five-seater Denza is expected to go on sale in China in September, and is priced at 369,000 renminbi, or about $60,000. With government subsidies, Daimler said the price for the consumer could be reduced by 120,000 renminbi.
Some analysts wondered why Daimler is developing electric vehicles outside of its main business in China, its joint venture with Beijing Automotive Industrial Holding Co. Ltd, known by its initials BAIC. The two partners operate the Beijing Benz Automotive Co., which manufactures Mercedes-Benz cars in China. Last year, Daimler took a 12% stake in BAIC.
Daimler officials said the decision to develop an electric vehicle with BYD was based on a desire to "not put all of one's eggs in a single basket" and the availability of mature technology.
"At the time BYD was one of the most advanced makers of batteries for electric vehicles," Dieter Zetsche, Daimler's chief executive, told the Wall Street Journal on the sidelines of Auto China, the Beijing car fair.
Despite China's slowing economic growth, some regions' lack of cars on the road and increasing wealth likely will increase demand over the medium to long-term. WSJ's Joanne Po speaks to IHS Automotive Global Head Edouard Tavernier.
Separately, Mr. Zetsche told reporters that Daimler expects sales growth in China this year will outpace the 11% growth the company achieved in 2013.
The Chinese government is undertaking a number of measures to fight pollution in its car-congested cities. Some cities have introduced efforts to slow the growth of cars on the road by restricting the number of new registrations. China has also introduced a cap on carbon-dioxide emissions and is promoting the rapid development of electric vehicles to reduce emissions.
General Motors President Dan Ammann told reporters Sunday that the future of electric cars in China depends largely on whether the technology can be made less costly, what is done to create an infrastructure for charging electric cars, and "what policy actions does the government take to encourage consumers to move toward electrification," which is industry code for the level of subsidies that the government is prepared to offer.
The pressure to ramp up development and production of electric vehicles and hybrids was on full display at the Beijing car show. Volkswagen, the world's second-largest car manufacturer by units sold, displayed plug-in hybrid versions of nearly its entire fleet—from the compact eUp! city car and the luxurious Audi A6 sedan, to be launched in China next year, to a plug-in hybrid version of the super-luxury Bentley.
"The Chinese government is determined to reduce pollution," said Karsten Engel, CEO of BMW's China business. "This is the future trend."
